Consumer Financial Protection Bureau Director Richard Cordray, shown here in this file photo, chastised GE Capital and Synchrony, its
retail bank, formerly known as GE Capital Retail Bank, as the bureau and the Department of Justice reached a $169
million settlement with the GE unit in a credit card discrimination case.

Synchrony Bank, the financial arm of General Electric, is blaming an error in its internal auditing process for its involvement in federal charges of discrimination against some delinquent credit card holders with Puerto Rico addresses and customers who chose to receive their communications in Spanish, which resulted in a $169 million settlement.

The bank discovered that the affected card holders were not informed about two of its credit card debt repayment programs. About 108,000 affected borrowers will receive payments from the $169 million allotment.

"The vast majority of the impacted customers have already received remediation, waivers or credits on closed or written-off accounts," said GE Capital spokeswoman Dori Abel, adding that there is about $34 million outstanding. "We have strong compliance programs in place, so when we identified the matter through our own internal audit we began the remediation. Any remaining customers who will receive remediation will be contacted directly by the bank."

The remediation will result in $11 million of payments or credits on active accounts, and all but $2 million has been paid, and $158 million of waivers or credits on closed or written-off accounts, according to the bank.

The bank notified the federal Consumer Financial Protection Bureau when the audit discovered the error. The violations occurred between January 2009 and March 2012, according to the government.

As a result of the joint enforcement action by the Department of Justice and the consumer bureau, GE Capital must refund $56 million to about 638,000 consumers who were subjected to deceptive marketing practices.

The order represents the federal government's largest credit card discrimation settlement in history, according to the bureau.

"The blatant discrimination that occurred here is unlawful and will not be tolerated," said Jocelyn Samuels, acting Assistant Attorney General for the Civil Rights Division of the Department of Justice. "Borrowers have the right to credit card terms that do not differ based on their national origin."

GE Capital provides store-branded credit cards that are sold to consumers by merchants and retailers across the country, and it is paying a $3.5 million penalty to the bureau for deceptive marketing.

The bureau's enforcement action also related to credit card add-on products discovered during an examination between December 2012 and February 2013, reporting that GE Capital's telemarketers misrepresented the products to consumers.

In March, Fairfield-based GE notified the Securities and Exchange Commission that it was filing for an initial public offering of its North American consumer lending unit, renamed Synchrony Bank this month.

The spinoff, which has not yet occurred, is part of a plan by GE CEO Jeff Immelt to reduce credit risks and return to industrial operations.